Rithm Property Trust Inc. Common stock

Greetings and welcome to the RPT Realty fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vin Chow, Senior Vice President of Finance. Thank you. You may begin.

Good morning, and thank you for joining us for RPT's fourth quarter 2020 earnings conference call. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Additionally, statements made during the call are made as of the date of this call. Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made. Although we believe that the expectations reflected in any forward-looking statements are based on reasonable assumptions, factors and risks could cause actual results to differ from expectations. Certain of these factors are described as risk factors in our annual report on Form 10-K for the fiscal year ended December 31, 2019, and quarterly report on Form 10-Q for the third quarter of 2020, and in our earnings release for the fourth quarter of 2020. Certain of these statements made on today's call also involve non-GAAP financial measures. Listeners are directed to our third quarter and fourth quarter press releases and our fourth quarter supplement, which includes definitions of those non-GAAP measures and reconciliations to the nearest GAAP measures, and which are available on our website in the Investors section. I would now like to turn the call over to President and CEO Brian Harper and CFO Mike Fitzmaurice for their opening remarks, after which we will open the call for questions.

Good morning, and thank you for joining our fourth quarter 2020 conference call. I hope you and your families are all well. 2020 will be a year not soon forgotten. The health and economic impacts from COVID-19 have been unprecedented. Add to this the social and political unrest our country has experienced, and 2020 will no doubt go down as one of the most historic and difficult years in our lifetime. While the issues facing an open-air shopping center REAP are small in comparison to 2020's broader challenges, I am proud of RPT's response and execution this past year. From our tenant assistance program and charitable donations, to our property level safety and curbside pickup initiatives, RPT demonstrated its commitment to our purpose of turning commercial ground into common ground. We also took swift and decisive actions to shore up our liquidity and preserve our access to capital with our first time investment grade credit rating from Fitch. In addition, I was very pleased with the team's tireless effort in pursuit of rent collections, which improved to 91% in the fourth quarter. Following the payoff of our remaining $100 million balance on a revolver, we have over $100 million of cash and a fully undrawn $350 million revolver, and are now positioned to take full advantage of our unique and valuable partnership with GIC. and opportunistically execute on our external growth plans. We continue to track a healthy pipeline of acquisitions and have started to see some improvement in activity in recent weeks. Let me just reemphasize that the underlying real estate is the primary driver of our acquisition strategy. What we then look for is growth. That could come in a variety of ways from under market rents and mismanaged assets to redevelopment opportunities. It could also come in a variety of different retail formats from grocery anchored, lifestyle centers, power centers, to community centers. As previously reported, we had five deals in our GIC venture either signed or in negotiations in February of 2020. Once the pandemic hit, we and our partners made the decision to get out of all of them. We are now fortunate to have the liquidity and the deep pipeline within our core markets and believe the widening value gap between property types, tenant categories, and markets is creating differentiated opportunities that we hope to take advantage of in 2021. One thing we pride ourselves on is skating to where the puck is going, not to where it's been. Last year, we entered the Austin market with our off-market acquisitions of Lake Hills Plaza. Since our acquisition, Tesla announced a new $1.1 billion assembly plant. Google, Oracle, and Digital Realty, to name a few, each announced relocation or expansion plans to Austin. And Barshop and Oles announced plans for a new $1 billion mixed-use development directly across the highway from our property. It's been a little over a year since our acquisition. We are more convinced than ever about this dynamic market that truly represents where the puck is going. From a leasing perspective, we continue to make good progress on our grocery negotiations. and are also in negotiations with tenant categories such as home improvement, wholesale club stores, off-price, QSR, and medical use tenants. This quarter, we signed a total of 120,000 square feet, up 10% year over year. Notable signings this quarter included two new deals with a modern tech-enabled healthcare provider. These deals exemplify our enhanced focus on health and wellness tenants. We also have good activity on the two Steinmark boxes that we took back in the quarter, where we have an opportunity to significantly improve the tenancies of both boxes. At under $1,150 of ABR per square foot, we also see a solid mark-to-market opportunity upon release of these spaces. One Steinmart box is already in lease, and the other has multiple LOIs that are being negotiated with very strong national brands. We ended the fourth quarter with a signed but not open backlog of 3.2 million, up from 3 million last quarter. We are currently tackling roughly 2 million of AVR that is currently in lease negotiation, up from about 1.5 million last quarter. giving us some visibility on offsets to potential future fallout. The leasing pipeline is robust, and we are encouraged by the impact it will have on our future cash flows. Additionally, we have a number of re-merchandising opportunities that we are pursuing that are listed in our supplement. These 11 projects consist of redemising, expanding, or combining spaces similar to the 18 targeted re-merchandising opportunities that we completed in 2019. As we did on those projects, we expect to earn attractive returns on our capital of high single to low double digits on this next set of deals. Despite the end of year increase in reported COVID cases, our suburban portfolio was less impacted by additional lockdown measures taken since the summer. 94% of our portfolio by ABR remains open, unchanged from last quarter, with 4% of our closures tied to our theaters. The reopening of our theaters remains fluid. Our exposure is almost entirely tied to Regal. whose parent company, Synerald, recently obtained additional financing they expect to provide liquidity through 2021 and beyond, which is a positive milestone for this tenant. Before I turn the call over to Mike, I want to end my remarks with some thoughts on our reinstated dividend. While we continue to place a high premium on our cheapest source of capital, retain cash flows, we understand how important the dividend is as a component of our total return to shareholders. With that in mind, we established a seven and a half cent per share common dividend for the first quarter 2021. The quarterly rate reflects a purposeful analysis of our expected taxable income and our liquidity needs. We believe the new rate is sustainable and can be grown in conjunction with earnings, while allowing us to preserve cash to support our growth opportunities, and providing sufficient cushion to weather periodic future downturns. With that, I will turn the call over to Mike.